Greece deeper in impasse as new gov't talks fail

Associated Press Modified: May 9, 2012 at 3:31 pm •  Published: May 9, 2012
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ATHENS, Greece (AP) — A second round of talks to form a coalition government collapsed Wednesday, with Greece's future in the euro and commitment to its international bailout deal in the balance and the specter of new elections looming ever larger.

Sunday's election threw the country's political scene into turmoil after voters angered by years of Europe's harshest austerity program — implemented to secure vital international bailouts and fend off bankruptcy — hammered mainstream politicians, but left no party with enough seats in Parliament to govern alone.

Alexis Tsipras, head of the runner-up Radical Left Coalition, or Syriza, met with heads of parties across the political spectrum as he tried and failed to win support for Greece's first left-wing-led government in four decades of democratic rule.

"We saw that our proposal enjoys broad social support, but weak parliamentary backing," Tsipras, 38, told a meeting of party lawmakers. "We can't make our dream come true, and form a left-wing government."

Tsipras' insistence that a new government denounce the bailout deal with the International Monetary Fund and other European countries provoked a backlash from the other two main parties, who argued the move would see Greece leave the common European currency and endure years of poverty and isolation.

The political uncertainty has alarmed Greece's international creditors, who have insisted the country must stick to the cost-cutting terms of its bailout.

Athens has promised to pass new austerity measures worth €14.5 billion ($18.9 billion) next month and to implement other reforms. These will be reviewed by its creditors, who will then determine whether to continue releasing rescue loans that are keeping Greece solvent.

The eurozone's bailout fund, the European Financial Stability Facility, approved the release of a €5.2 billion ($6.73 billion) batch in rescue loans Wednesday. Greece will receive €4.2 billion ($5.44 billion) of that Thursday, while another €1 billion ($1.3 billion) is expected in June depending on Athens' needs.

German Chancellor Angela Merkel stressed she still wants to keep Greece in the eurozone.

"I have always wanted to solve (the debt crisis) in such a way that Greece remains a member of the eurozone. Nothing about that has changed," she was quoted as saying in an interview with the daily Passauer Neue Presse.

Merkel has been a leading advocate of austerity as a cure for Europe's debt troubles, but that course has become hugely unpopular in Greece — and Sunday's election has generated new political instability.

Merkel insisted Greece must stick to its agreements with creditors and its reform course.

"Only this way can we imagine Greece's road back to stability and economic strength," she said.

In Athens, the efforts for stability and economic strength struck a road bump.

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